Claims of price gouging from grocers has been a hot topic since presidential candidate Kamala Harris announced earlier this month that her administration would take on the issue if elected.
But the National Grocers Association said last week that calling for a ban on price gouging “is a solution in search of a problem.”
Instead, the association that represents close to 1,800 independent grocers is arguing that the federal government should focus its attention on price discrimination, which could be reined in by strict enforcement of the Robinson-Patman Act.
“Our independent grocers, already operating on extremely thin margins, are hurting from the same inflationary pressure points as their customers. Labor, rent, swipe fees, utilities; you name it, the price has increased. But what’s really hurting our local, independent grocers, is the lack of fair competition with big-box retailers, who leverage their influence in ways that your independent grocer down the street can’t, leading to increased prices for everyone else,” NGA said in a press release.
The association is calling on the next administration to enforce the Robinson-Patman Act, which it says “has been ignored for decades as big chains unfairly wield their influence.”
Chris Jones, the NGA’s chief government relations officer and counsel, told Supermarket News in an interview the costs of running a business have gone up on everything from labor to credit card swipe fees, making it more expensive for grocers to do business.
“We have borne a lot of the blame for inflation from consumers who think that because our costs are higher, we're somehow gouging them, rather than, you know, what's actually happening behind the scenes in the marketplace,” Jones said.
Although calling out grocers for alleged price gouging “polls really well” with voters, he said, it “creates even more consumer backlash for the independent grocers who have footed a disproportionate share of that blame.”
Rather than price gouging, Jones said the grocery industry has seen opportunism related to the pandemic.
“So, for example, during Covid, when supply chains broke down, there wasn't enough product to go around. The large big-box stores basically told suppliers that they needed product first, or they would assess penalties,” he said.
These retailers required the same cost structures, “so, what happens when large retailers who are squeezing the suppliers, (independent grocers) are the ones who are kind of the victims of that in a lot of cases, because not only were our shelves unable to be filled, but our costs went up,” Jones said.
This confirms accusations made by the Federal Trade Commission in a report released in March that said big grocers like Kroger and Walmart used supply chain disruptions “as an opportunity to further raise prices and increase their profits, which remain elevated today.”
That report showed that grocers used rising costs to increase profits. The FTC identified the following companies as the worst violators: Walmart, Amazon, Kroger, C&S Wholesale Grocers, Associated Wholesale Grocers, McLane Co., Procter & Gamble, Tyson Foods, and Kraft Heinz.
“This is all a symptom to a problem that that we're currently experiencing in the grocery marketplace, which is to cement consolidation and the power buyers who are leveraging and using their their muscle power essentially, and squeezing suppliers and telling suppliers you have to give us access to certain products, access to certain packaging sizes, and now we're seeing accesses to certain pricing and promotional strategies,” Laura Strange, NGA chief communications and engagement officer, told Supermarket News.
